Opec-Plus, IEA Diverge on Oil Market Needs

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The news of a huge release of strategic crude stockpiles by International Energy Agency (IEA) member states show that consumers have different priorities and views of the oil market than producer group Opec-plus. The latter continues to see a "well-balanced" oil market where soaring prices are responding to geopolitical events, namely Opec-plus member Russia's Feb. 24 invasion of Ukraine and the market chaos that ensued. The IEA states, led by the US, are worried about the impact of high prices on their economies and their political fortunes as inflation bites harder. Whereas the IEA members see their action as a proactive way to get ahead of potential Russian production losses — which they think could hit 3 million barrels per day from April — Opec-plus is keen on keeping Russia as a critical member and thinks that tapping into its limited spare capacity to add supply could backfire and send prices higher. To Opec, market management during turbulent times means keeping a steady hand on policy and using its spare capacity, estimated at around 2.5 million b/d, wisely to avoid further panic. “Releasing stocks is not a form of market management, it just distorts the market and causes even higher prices,” said one Opec-plus delegate. For now, Opec-plus is not concerned about its lack of ability to deliver on the 400,000 b/d monthly supply additions it has promised, and some members of the group have used this shortcoming to argue that more investment is needed to boost spare capacity in the future to avoid another supply crunch. Gulf producers have shown frustration over US requests to increase production when the Biden administration's policies indicate it could abandon hydrocarbons again in the future as part of its climate agenda.

Oil Inventories, Crude Oil, Oil Demand, Oil Supply, Oil Forecasts, Opec/Opec-Plus, Opec-Plus Supply , Ukraine Crisis
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